By Gene Marcial, DailyFinance

Every quarter, stock pickers at investment firm Gabelli & Co. come up with five value stocks that are trading way below their intrinsic worth. It's a nervy and challenging task, especially because the Gabelli analysts identify the catalysts they believe would catapult the shares to their utmost potential. And each quarter, their choices deliver enviable results.

The Gabelli team has been picking what it calls its "Focus Five" stocks since Jan. 31, 2006, and within that time span their calls have advanced a mighty 168.6%, outdistancing by a wide margin the Standard & Poor's 500 stock index, which lost 3.7% in that period. During the previous quarter (Aug. 1 to Oct. 29), the Focus Five also outperformed the S&P 500, with a gain of 13.53% vs. S&P's 7.41% gain.
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Daniel M. Miller, who heads the Gabelli Focus Five team, notes that each chosen stock, for the most part, outperformed the S&P quite convincingly. One such super-performer was Take Two Interactive ( TTWO - Get Report), which advanced 84% in the first quarter of 2008, beating the S&P's 4% gain. And Oceaneering International ( OII - Get Report), which jumped 44% in the second quarter of 2006, handily outperformed the S&P, which declined 5.84% during that quarter.

Here are the latest Focus Five hopefuls for the final quarter of 2010:

Madison Square Garden ( MSG - Get Report), spun off in February 2010 by Cablevision ( CVC). It controls leading sports and entertainment assets, including the New York Knicks of the National Basketball Association, the New York Rangers of the National Hockey League and a number of cable networks and real estate properties.

Clear Channel Outdoor Holdings ( CCO - Get Report), the leading global outdoor advertising company. It operates in several top markets in the U.S. and in 20 other countries.

National Fuel Gas ( NFG - Get Report), an integrated energy company with six operating segments. Its businesses include utility operations, natural-gas transmission pipelines that provide interstate gas transportation and storage services from Pennsylvania to the New York-Canadian border, and exploration and production, primarily in California, Appalachia and the Gulf of Mexico.

NII Holdings ( NIHD - Get Report), a Reston, Va.-based leading provider of digital wireless services. It offers products and services for individuals and businesses in Argentina, Brazil, Chile, Mexico and Peru.

Penske Automotive Group ( PAG - Get Report), which operates dealerships that sell new and used vehicles and aftermarket auto products. It operates mostly in the U.S. and Britain.

Miller believes that Madison Square Garden, currently trading at $20 a share, is priced way below its real worth because it owns some of the most valuable assets in New York City. Apart from its legendary Madison Square Garden sports and entertainment arena, the company also owns the world-famous Radio City Music Hall, the Beacon Theater and Chicago Theater. The now-publicly traded MSG, says Miller, is fully focused on enhancing shareholder value in an effort to attract more investors. Miller argues that MSG's sports networks alone are worth the current price of the stock and that investors are paying practically nothing for the rest of company's assets. Miller puts the private market value of MSG at $50 a share.

Clear Channel Outdoor Holdings is also way undervalued, figures Miller, given the "improving cyclical and long-term dynamics in outdoor advertising." It's trading at $11 a share, or about 8.3 times its projected earnings before interest, taxes, depreciation and amortization. The company operates over 834,000 advertising displays worldwide, including billboards, displays in buses and transit stations, as well as displays in shopping malls. It's possible, says Miller, that Clear Channel could initiate a dividend. Speculation is that a potential one-time payment of $500 million, or $1.41 a share, may be paid out to shareholders. Also a positive is the recent approval by the company's board to repurchase $100 million worth of stock. He puts the stock's private market value at $19.

National Fuel Gas, based in Buffalo, N.Y., has engaged an investment adviser to explore potential joint-venture opportunities and evaluate other alternatives for enhancing shareholder value, according to Miller. He figures the stock, currently trading at $56 a share, has an intrinsic private market value of $79 a share.

NII Holdings offers a fully integrated wireless communications tool with digital cellular voice and data services, plus Internet access. It posted operating revenues of $1.4 billion in the third quarter of 2010 and consolidated net income of $136 million, or 81 cents a share. That's up from a year ago, when NII reported revenues of $1.1 billion and earnings of 44 cents a share. Speculation is NII may form a partnership with Grupo Televisa. The company is also aiming to gain more spectrum in Brazil, which should help NII enhance its services and expand its addressable markets. Currently trading at $41 a share, the Gabelli analysts put the stock's 2011 intrinsic value at $66 a share.

Penske Auto Group, the second-largest U.S. automotive retailer by revenue, is expected to benefit from a projected robust used-vehicle market next year. Compared with AutoNation ( AN - Get Report), the industry's market leader, Penske is cheap at $13 a share, or 12 times projected 2010 earnings of $1.10 a share, and 10 times estimated 2011 forecast of $1.30 a share, Miller figures. He estimates the intrinsic value of Penske's stock at $22 a share.

The betting is that the Gabelli Focus Five stocks will perform as well, if not better, than their past picks. And if they do, it should serve as a reminder to investors that astute and dedicated stock-picking is still the most reliable way to consistently beat the market.

-- Gene Marcial writes for AOL's DailyFinance.